What happened
Shares of Dutch Bros (BROS -0.66%) were tasting like a day-old cup of coffee in morning trading, with the stock falling 7.2% at 11:25 a.m. ET Thursday, though there was no company-specific news to drive the movement.
The drive-thru coffee shop's stock fell sharply after the company released its earnings report in May over concern about inflation's impact on its business. But shares have bounced sharply higher since then as the number of shares sold short jumped nearly 30%.
Image source: Dutch Bros.
So what
Over a quarter of the coffee slinger's shares outstanding are sold short as of the latest report in June, and meme-stock traders are known to favor such situations in hopes of triggering a short squeeze by piling into the stock.
Meme stocks are those that trade more on how much social media chatter they can generate rather than on a company's business fundamentals. In the coffee shop's case, the underlying operations are pretty good, too.
Dutch Bros is confident enough in its business to continue targeting an aggressive store opening campaign. With over 570 locations already open, it is looking to have nearly 700 stores in operation by the end of the year.
Now what
The current economic environment remains in a state of flux and an official recession could be on the horizon. Gross domestic product (GDP) numbers were revised lower again for the first quarter to a decline of 1.6%, and the second quarter may show negative GDP as well.
Although the two quarters of decline is a popular measure of a recession, it is not an "official" declaration, as other factors are taken into consideration by the National Bureau of Economic Research.
